Are you looking forward to summer? Croatia is a beautiful country with a rich culture and history, and is a popular destination for many tourists, especially from Austria, Germany, and Switzerland. Therefore, many people choose to purchase real estate in Croatia, either as a vacation home or permanent residence.
However, buying property in Croatia can come with some legal challenges, especially for foreigners who do not speak Croatian or know the local laws and customs. In this post, we will provide you with an overview of some legal aspects of buying property in Croatia and present a brief checklist of things to consider when making a purchase.
Legal aspects of buying real estate in Croatia
Some of the basic legal aspects that foreigners need to consider before buying property in Croatia include:
Foreign ownership: EU citizens do not need permission to purchase property in Croatia. They are treated as Croatian citizens. However, restrictions still apply to citizens of third countries (outside the EU) and certain types of property (agricultural land, forest areas). Citizens of third countries need to obtain prior approval from the Croatian Ministry of Justice to purchase property in Croatia.
Property transfer: The property transfer process in Croatia is very similar to that in Austria. Registration in the land registry is mandatory for the acquisition of ownership based on a purchase contract. This is separate from registration in the cadastre, which only reflects the factual circumstances of the specific property. A review of the ownership status should always precede the acquisition. This review is complex and requires the assistance of an experienced lawyer. The process includes verifying the ownership status and reviewing or obtaining the necessary permits (including building and occupancy permits).
Taxes: Various taxes apply when purchasing property in Croatia, including value-added tax and real estate transfer tax. Depending on the property, either value-added tax or real estate transfer tax will apply. It should be noted that real estate transfer tax is not dependent on the purchase price, but on the market value of the property, which is determined by the tax authorities.
Notary: The purchase of real estate in Croatia requires notarization of the seller's signature on the purchase contract by a notary public. The buyer's signature does not need to be notarized.
Checklist for buying real estate in Croatia
Here is a checklist of things to consider when purchasing property in Croatia:
Find an experienced real estate lawyer to guide you through the entire purchase process. Choose a lawyer you trust, and keep in mind that the lawyer recommended by a real estate agent may not exclusively represent your interests, and may even have a financial relationship with the agent or seller.
Typically, the buyer (and not the seller) engages the lawyer of their choice to draft the purchase contract. Within the framework of the purchase contract, the warranty provisions and, in particular, the manner of payment of the purchase price should be considered.
Through your lawyer, check whether the property is even located in a building zone (regardless of whether it is a plot of land or an already constructed object (family home, building, commercial property).
Check the permits: Make sure that all necessary permits for the construction of the property are in place and that the property complies with local building regulations. If you intend to purchase a condominium/apartment, it should be checked whether condominium ownership can be established under Austrian, German or Swiss law.
Consider the taxes: Take into account the various taxes that apply when acquiring a property in Croatia: the value-added tax and the real estate transfer tax. The value-added tax in Croatia is currently 25% and applies to the sale of new buildings and other properties that are sold within 2 years of completion. The real estate transfer tax, on the other hand, is paid by the buyer upon acquisition of a property and is currently 3% of the purchase price in Croatia.
In addition, depending on the type of property and location, there may be other taxes, levies and fees that apply, such as tourist tax, municipal charges or the fee for registering a new address. Therefore, it is important to thoroughly inform yourself about the different taxes and fees before purchasing a property in Croatia in order to avoid unexpected costs later on.
Acquiring a property in Croatia can be an interesting investment for foreigners, but it requires careful examination and consultation. It is important to understand all legal aspects and to have a checklist in place to ensure that the purchasing process runs smoothly and provides legal certainty to the buyer.